Table 3 Special funding and earmarked capital allocations for 2008-09

Executive summary

Purpose

1. This document summarises our provisional allocations of recurrent funding to institutions for the academic year 2008-09.

Key points

2. The total HEFCE grant available for the 2008-09 academic year is £7,476 million. This represents an overall cash increase of 3.3 per cent compared with the equivalent figure for 2007 08. The total includes recurrent funding of £4,632 million for teaching (of which £364 million is for widening participation), £1,460 million for research, and £120 million for business and community engagement. In addition, we are providing a further £902 million for earmarked capital grants, £337 million for special funding, and £25 million for very high cost and vulnerable science subjects.

3. The institutional allocations for teaching and research announced in this publication show an average 3.5 per cent increase in recurrent grant for the sector. After adjusting funding for equivalent or lower qualifications (ELQs), we have provided a full uplift for inflation to the main teaching grant allocation for each institution. Many institutions have also gained significant additional funded student numbers. The total funding for widening participation is also being increased in line with inflation. None of the increases referred to in this document take account of the additional fee income in 2008-09 that is expected following the introduction of variable fees for full-time undergraduates.

4. There are increases in funding for research, in keeping with the Government's commitment to enhance the research base through both sides of the dual-support system. We anticipate further increases in research funding in 2009-10.

5. We are allocating a total of £902 million for earmarked capital grants. This includes £164 million from the science budget for the Research Capital Investment Fund. Therefore the higher education budget for earmarked capital of £738 million is the same cash figure as for 2007-08. The distribution of this funding between institutions has been announced separately and is not included in this document (paragraph 63 provides further information).

Teaching

6. The total recurrent funding for teaching that is available has increased by 4.1 per cent over the equivalent final allocation to the sector for 2007-08. This has allowed us to provide for a significant number of additional full-time equivalent (FTE) student places, while providing an uplift for inflation to teaching grant after adjustments to reflect the phasing out of funding for ELQs. We have also provided an uplift for inflation for widening participation funding. We have made commitments for approximately 24,000 FTE additional funded places for 2008-09.

7. The total of £4,632 million for teaching includes the following:

£364 million to support widening participation for students from under-represented groups or who are at greatest risk of not completing their studies.

£91 million for additional funded places, mainly awarded following HEFCE Circular Letter 04/2007 'Allocation of additional student numbers in 2008-09'. This also includes £6 million for increases in medical and dental student numbers.

Research

8. A total of £1,460 million is allocated for research. This is an increase of 2.9 per cent compared with the equivalent funding for 2007-08. Within this overall increase we have:

Maintained in real terms the total for the following streams within quality related research (QR):

charity support fund

business research element

research degree programme (RDP) supervision fund.

Increased the average rate of grant on a like for-like basis for submissions rated 4, 5 and 5* in the 2001 Research Assessment Exercise (RAE) by approximately 2.53, 2.75 and 3.53 per cent respectively. These increases take account of mainstream QR, London weighting on mainstream QR and funds for the 'best 5-star' departments.

Moderation of teaching and research

9. We have continued our policy of phasing in changes by moderating the allocations. In general, each institution's recurrent resource for teaching and research will be at least maintained in cash terms compared with the equivalent, unmoderated figure for 2007-08, but we will not provide moderation where it amounts to less than £100,000.

Special funding and earmarked capital

10. We are allocating a total of £902 million for earmarked capital grants. This includes £164 million from the science budget for the Research Capital Investment Fund. Therefore the higher education budget for earmarked capital of £738 million is the same cash figure as for 2007-08. The total allocated as special funding has decreased by £112 million (25 per cent) since last year. This reduction has come about largely because funding under the Higher Education Innovation Fund is being incorporated into recurrent grant allocations, as described in paragraph 61. Special funding continues to represent a declining proportion of our overall budget.